Risk increases as the term of the loan decreases

Assignment Help Financial Management

Reference no: EM13937389

1. The annual interest rate divided by the number of days in a year is the periodic rate. True/False

2. The usury rate is a benchmark rate used to guide changes on varaible-rate programs. T/F

3. Credit life insurance generally will pay off the balance due on a loan if an insured borrower dies. T/F

4. Fixed -rate loan portfolios expose lenders to higher interest-rate risk. T/F

5. In general, risk increases as the term of the loan decreases. T/F

6. The annual percentage rate is an interest rate similar to an index rate. T/F

7. Loans charged to loss represent an expense because they are assets that the bank may not recover. T/F

8. The interest rate on a variable rate loan varies depending on market conditions and the terms of the contract. T/F

Reference no: EM13937389

Questions Cloud

Increase the cost of equity for a firm with a beta : Which of the following will increase the cost of equity for a firm with a beta of 1.1?

Hypothesis suggests that capital structure : The Modigliani and Miller hypothesis suggests that capital structure doesn't matter. All of the following conditions need to be met for this hypothesis to be true except:

What is the cost of capital and cost different : Given the following information: interest rate 8% tax rate 30% dividend $1 price of the common stock $50 growth rate of dividends 7% debt ratio 40% a. Determine the firm's cost of capital. b. If the debt ratio rises to 50 percent and the cost of fund..

Concerning a corporations optimal capital structure : Which of the following statements is most correct concerning a corporation's optimal capital structure?

Risk increases as the term of the loan decreases : The annual interest rate divided by the number of days in a year is the periodic rate. Fixed -rate loan portfolios expose lenders to higher interest-rate risk. In general, risk increases as the term of the loan decreases. Loans charged to loss repres..

Financial ratio is one financial value-measurement expressed : A ratio is one value expressed to another. A financial ratio is one financial value or measurement expressed to another. There are about 20 financial ratios commonly used to assess one company's performance compared to another company in the same ind..

Determining the monetary advantage of investment opportunity : There are several accepted methods of determining the monetary advantage of one investment opportunity over another: The payback method; zero discount rate; net present value; internal rate of return; modified internal rate of return; etc. Discuss on..

Decide to invest in corporate bonds : Suppose you decide to invest in corporate bonds. Accordingly, you visit a bond store. You see 3 bonds on the shelf. One is priced at $1,015.53, another is priced to sell at $1,300.00, and a third is selling at a discounted amount of $876.06.

Portfolio equally invested in risk-free asset and two stock : You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a beta of 1.12 and the total portfolio is equally as risky as the market, what must the beta be for the other stock in your portfolio?

User Account

All Pages